IHT Warning Sounded Over UK Self-Invested Personal Pensions

by Robert Lee, Tax-News.com, London

16 February 2005

Pension experts have warned that Self-Invested Personal Pensions (SIPPS) may not be completely protected from inheritance tax because of incorrect wording in the original Inland Revenue draft, according to the Daily Telegraph.

SIPPs, which operate in a similar fashion to insured personal pensions, are permitted to invest directly in UK and overseas quoted securities, as well as commercial property.

However, according to Alec Ure, the author of a textbook on Sipps, the Revenue’s model rules were initially drafted incorrectly, and needed to be revised to include wording dealing with discretionary trusts.

"Where bad draughtsmen have bolted the draft rules onto a Sipp product, there may be problems in the future,” Mr Ure warned.

Pensions lawyer John Quarrell believes that up to 50% of SIPPS could be affected by the problem.

"It's up to the providers to ensure their trust documentation is correctly worded,” he was quoted by the Telegraph as observing.

However, the major providers of such pension products have denied that there is a problem with the wording of SIPPS documents.

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